Charles Collier & Anor v The Commissioners for HMRC
[2023] UKFTT 993 (TC)
TSS Fire Limited & Anor v The Commissioners for HMRC
1 August 2024
[2024] UKFTT 717 (TC)
First-tier Tribunal
A company and its boss didn't pay enough tax and got caught. The tax office (HMRC) proved they did it on purpose, so penalties were applied. The company and boss tried to argue they should get a smaller penalty but failed. The judge agreed with the tax office's calculations.
Key Facts
- •TSS Fire Limited and Mr. Paul Porter appealed tax and penalty assessments by HMRC.
- •HMRC assessments against TSS Fire Limited involved corporation tax under section 455 Corporation Tax Act 2010 for loans to Mr. Porter and associated penalties.
- •HMRC assessments against Mr. Porter included income tax for the write-off of debt and a penalty.
- •Mr. Monk, representing the appellants, conceded on some points, focusing the hearing on penalty appeals.
- •The appeals centered on the penalties levied and the application of Schedule 24, Finance Act 2007, concerning penalties for inaccuracies in tax returns.
- •HMRC argued that the inaccuracies in both appellants' returns were deliberate, while the appellants contested the sufficiency of mitigation for 'telling,' 'helping,' and 'giving access' and the absence of 'special circumstances'.
Legal Principles
Penalties for tax inaccuracies are governed by Schedule 24, Finance Act 2007, which defines 'careless,' 'deliberate but not concealed,' and 'deliberate and concealed' inaccuracies.
Schedule 24, Finance Act 2007
For a deliberate inaccuracy, HMRC must prove an intention to mislead the Revenue (HMRC v Tooth [2021] 1 WLR 2811).
HMRC v Tooth [2021] 1 WLR 2811
Section 114(2) of the Taxes Management Act 1970 validates assessments despite minor variances between the notice and assessment (R (on the application of Archer) v HMRC [2018] STC 38).
Taxes Management Act 1970, s. 114(2)
'Special circumstances' justifying penalty reduction require circumstances sufficiently special to warrant a reduction (Barry Edwards v HMRC [2019] UKUT 131).
Barry Edwards v HMRC [2019] UKUT 131
Outcomes
Corporation tax assessments against TSS Fire Limited upheld (in slightly reduced amounts).
No serious challenge to validity; HMRC evidence supported assessments; appellants provided no evidence of overcharge.
Penalty assessments against TSS Fire Limited upheld.
HMRC proved deliberate behaviour; insufficient mitigation given; no special circumstances.
Discovery assessment against Mr. Porter upheld (£38,217.30).
Valid discovery of insufficiency; error in assessment amount corrected under section 114 TMA; no challenge to amount.
Penalty assessment against Mr. Porter upheld.
HMRC proved deliberate behaviour; maximum mitigation given; no special circumstances.